Press Releases

10/25/2017

LIBOR manipulation hurt government and
not for profit counterparties in Louisiana and across the countryBATON ROUGE, LA – Louisiana Attorney
General Jeff Landry today announced a $220 million settlement with Deutsche
Bank for fraudulent conduct involving the manipulation of LIBOR, a benchmark
interest rate that affects financial instruments worth trillions of dollars and
has a widespread impact on global markets and consumers. The settlement is
expected to bring almost $13 million to Louisiana.
“Today’s settlement concludes a
multistate investigation into deceptive trade practices by Deutsche Bank,” said
General Landry. “My office and I will continue to do all we legally can to
protect Louisiana.”
The investigation – conducted by a
working group of 45 State Attorneys General that was led by the Attorneys
General of New York and California – revealed that Deutsche Bank manipulated
LIBOR in a number of ways. Deutsche Bank employees improperly made internal
requests for LIBOR submissions to benefit Deutsche Bank’s trading positions,
attempted to influence other banks’ LIBOR submissions in a manner intended to
benefit Deutsche Bank’s trading positions, and received communications from
inter-dealer brokers and external traders attempting to influence Deutsche
Bank’s LIBOR submissions. At times, Deutsche Bank LIBOR submitters and
supervisors expressly acknowledged and indicated they would work to implement
the requests they received.
Given this conduct, Deutsche Bank LIBOR
submitters and management had strong reason to believe that Deutsche Bank’s and
other banks’ LIBOR submissions did not reflect their true borrowing rates (as
they were supposed to do pursuant to published guidelines) and that the LIBOR
rates submitted by the banks did not reflect the actual borrowing costs of
Deutsche Bank and other panel banks.
Deutsche Bank employees did not
disclose these facts to the governmental and not-for profit counterparties with
whom Deutsche Bank executed LIBOR-referenced transactions even though these
rates were material terms of the transactions.
Government entities and not-for-profit
organizations in Louisiana and across the Nation, among others, were defrauded
of millions of dollars when they entered into swaps and other investment
instruments with Deutsche Bank without knowing that Deutsche Bank and other
banks on the U.S. Dollar (USD)-LIBOR-setting panel were manipulating LIBOR.
Governmental and not-for-profit
entities with LIBOR-linked swaps and other investment contracts with Deutsche
Bank will be notified if they are eligible to receive a distribution from a
settlement fund of $213.35 million. The balance of the settlement fund will be
used to pay costs and expenses of the investigation and for other uses
consistent with state laws.
Deutsche Bank is the second of several
USD-LIBOR-setting panel banks under investigation by the State Attorneys
General to resolve the claims against it, and it has cooperated with the
investigation. The Attorney General’s Office benefits from the information and
evidence provided by corporations that timely cooperate with the Attorney
General’s investigations. Such cooperation can facilitate civil enforcement
efforts, including the distributions of funds for victims of the offense.
The states joining Louisiana in the
Deutsche Bank settlement include Alabama, Alaska, Arizona, Arkansas,
California, Colorado, Connecticut, District of Columbia, Delaware, Florida,
Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota,
Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee,
Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. The
investigation into the conduct of several other USD LIBOR-setting panel banks
is ongoing.